What is HSN Code?
HSN stands for Harmonized System of Nomenclature. HSN was developed by the World Customs Organization (WCO) to classify the goods across the world in a systematic manner for the purpose of taxation in identifying each product. HSN classification covers more than 5,000 products, and it came into force in 1988. HSN is widespread and is adopted by more than 200 countries for uniform classification, the base for customs tariff and for collecting international trade statistics.
How Does HSN Code Work?
HSN code has over 5,000 commodity groups, each of the group is identified by a six-digit code, which is arranged in a legal and logical structure. The HSN code is supported by well-defined rules to achieve uniformity.
Importance of HSN Code
- Since the HSN code is accepted internationally for classifying products, that makes the HSN Code Finder a logical way of identifying goods for both domestic and foreign trade.
- HSN code is used to gather data and understand foreign and domestic trade in a more efficient manner.
- Therefore, it will help the government in deciding macroeconomic policies related to the trade of these commodities.
Latest Updates: HSN in GST
HSN Codes to Be Declared up to 31 March 2021:
| Turnover | No.of digits of HSN to be declared |
|---|---|
| Up to 1.5 crore | 0 |
| 1.5 crore – 5 crore | 2 |
| More than 5 crore | 4 |
HSN Codes to Be Declared from 1 April 2021:
Vide CGST notification number 78/2020 dated 15 October 2020
| Turnover | Type of Inovice document | No.of digits of HSN to be declared |
|---|---|---|
| Up to 5 crore | Mandatory for B2B tax invoices | 4 |
| Mandatory for B2C tax invoices | 4 | |
| More than 5 crore | Mandatory for all invoices | 6 |
Note: Annual aggregate turnover for the previous financial year, i.e., for reporting invoice in FY 2021-22, turnover to be referred must be of FY 2020-21.
HSN Worldwide
The HSN Finder is used by more than 200 countries and economies for the following reasons:
- Uniform classification of goods/products
- The base for customs tariffs
- Collection of international trade statistics
An important fact about HSN is that over 98% of the merchandise in international trade is classified in terms of the HSN.
HSN in India
India has been a member of the World Customs Organization (WCO) since 1971. It was originally using 6-digit HSN codes to classify commodities for Customs and Central Excise. Later Customs and Central Excise added two more digits to make the codes more precise, resulting in an 8 digit classification. The HSN will help every taxpayer in India to search the GST rate by just entering the HSN code after which the system will automatically show the tax rate applicable on the commodity under the GST, hence simplifying the trade procedures in India.
Structure of HSN Code
The HSN structure consists of 21 Sections with 99 Chapters, 1,244 headings and 5,224 subheadings. Each section is divided into a Chapter and each Chapter is divided into a Heading. Each Heading is further divided into a Subheading. Section and Chapter denote the categories of products or goods while Heading and Subheading denote the products in detail.
It is mandatory for a product to have all eight digits in case of export and import under the GST regime.
- Chapter: Under the HSN module there are 99 chapters.
- Heading: Under these chapters, there are 1244 headings.
- Subheading: There are 5224 subheadings under these headings.
The first six digits of the HSN code cannot be altered as per the guidelines of WCO but the last four digits which include Regional tariff and National tariff can be changed by the customs authority.
What Is an HSN Code for GST?
HSN codes were earlier applicable only for Central Excise and Customs, but with the implementation of GST now there is a requirement for businesses to mention HSN codes in their tax invoice. Following are the provisions related to HSN code under GST:
- Annual turnover of less than and up to Rs 1.5 cr – not required to mention HSN code
- Annual turnover of more than 1.5 cr up to 5 cr – required to mention HSN code up to 2 digits
- Annual turnover exceeding 5 cr – required to mention HSN code up to 4 digits.
HSN classification was already in existence in India during the Central Excise and Customs regime, however, it became detailed in the GST with two more digits added to it. Hence, an HSN code in the GST regime contains 8 digits.
What Is SAC?
Similar to the HSN code finder, codes for services are called Services Accounting Code or SAC. As with goods, services are also classified evenly for recognition, measurement, and taxation purposes.
SACs are issued by the Central Board of Indirect Tax to classify each service. The SACs are used at the time of generating invoices for the services rendered.
Format of SAC
The SAC code is a unique 6 digit number that contains two numbers each for Chapter, Heading and Subheading.
Below we have given an example for the same:
SAC code for Legal documentation and certification services concerning patents, copyrights and other intellectual property rights is 998213
- The first two digits are the same for all services i.e. 99
- The next two digits (82) stands for nature of service, in this case, legal services – Heading
- The last two digits (13) stands for the detailed nature of service, i.e., legal documentation for patents – Subheading.
GST HSN Finder – Steps to Search HSN/SAC Tax Rates
Follow the steps outlined below to find the HSN codes for GST:
- Visit the GST portal home page – services.gst.gov.in/services/login and enter the login details such as Username and Password.
- Click on Services – User Services – Search HSN/SAC code.
- Click on the HSN checkbox.
- Select the tax-type you are searching for in the Tax-Type drop-down list.
- Now, enter the HSN code or name of the chapter whose rates you are looking for under the “Search HSN Chapter by Name or Code.”
- Additionally, enter the HSN code of the goods whose tax rates you are looking for under the “Search HSN Code” category.
- Select the appropriate dates in the “Effective Period” category from the calendar.
- Once the details are filled in, click on the “Search” option.
- In case you select SGST from the Tax Type list, you also need to select the State for which you want to check the tax rate.
In the case of SAC codes, follow the steps mentioned below:
- Click on the SAC checkbox.
- Select the tax-type you are searching for in the Tax-Type drop-down list.
- Furthermore, enter the Service Classification Code (SAC) whose rates you are looking for under the “Service by Name or Code.”
- Additionally, select the appropriate dates in the “Effective Period” category from the calendar.
- Lastly, click on the “Search” option and the details will be displayed on the screen.
HSN Code List
All the goods and services are classified into 21 sections and 99 chapters. The chapters are again classified into 1244 subheadings. We have provided you with the sections and chapters list below:
HSN Section-wise Code List
| Section | Hsn Code List |
|---|---|
| Section 1 | Live animals, animal products |
| Section 2 | Vegetable products |
| Section 3 | Animal or vegetable fats and oils and their cleavage products, prepared edible fats, animal or vegetable waxes |
| Section 4 | Prepared foodstuffs, beverages, spirits and vinegar, tobacco and manufactured tobacco substitutes |
| Section 5 | Mineral products |
| Section 6 | Product of the chemicals or allied industries |
| Section 7 | Plastics and articles thereof, rubber and articles thereof |
| Section 8 | Raw hides and skins, leather, fur skins, and articles thereof, saddlery and harness, travel goods, handbags and similar containers, articles of animal gut (other than silkworm gut) |
| Section 9 | Wood and articles of wood, wood charcoal, cork and articles of cork, manufacturers of straw, of esparto or of other plaiting materials, basketwork and wickerwork |
| Section 10 | Pulp of wood or of other fibrous cellulosic material, recovered (waste and scrap) paper or paperboard, and articles thereof |
| Section 11 | Textile and textile articles |
| Section 12 | Footwear, headgear, umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and parts thereof, prepared feathers and articles made therewith, artificial flowers, articles of human hair |
| Section 13 | Articles of stone, plaster, cement, asbestos, mica, or similar materials, ceramic products, glass and glassware |
| Section 14 | Natural or cultured pearls, precious or semi-precious stones, precious metals, metal clad with precious metal, and articles thereof, imitation jewellery, coins |
| Section 15 | Base metals and articles of base metal |
| Section 16 | Machinery and mechanical appliances, electrical equipment, parts thereof, sound recorders and reproducers, television image and souch recorders and reproducers, and parts and accessories of such article |
| Section 17 | Vehicles, aircraft, vessels and associated transport equipment |
| Section 18 | Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus, clocks and watches, musical instruments, parts and accessories thereof |
| Section 19 | Arms and ammunition, parts and accessories thereof |
| Section 20 | Miscellaneous manufactured articles |
| Section 21 | Works of art, collectors’ pieces and antiques |